Earlier this spring the Missouri Supreme Court took up a challenge to the enforcement of a no-contest clause in a Missouri trust. The beneficiary of a trust was challenging the trustee’s successful enforcement of a no-contest disqualification clause after the beneficiary sought to have the trustee removed for failing to make distributions. This challenge, however, was explicitly forbidden by the trust’s no-contest clause.
Aptly enough, the Supreme Court began its analysis with two seminal observations: “A no-contest clause in a trust serves a dual purpose: it permits the settlor to dispose of his own property as he sees fit, and it forces the grave consequence of a forfeiture upon the beneficiary who attempt[s] to frustrate the intention of the donor as expressed in the disposing instrument” and “Resolving the issue of whether a beneficiary has violated a forfeiture provision of a trust depends on the facts of the case and the language of the forfeiture provision.”
Next, the Court addressed the appellant’s claim that prior Missouri case law had only addressed the validity of no-contest clauses that challenge the validity of the trust. The Court agreed, but declined to take the bait and accept the appellant’s invitation to declare invalid no-contest clauses that prohibit efforts to assert breaches of the trust provisions or seek to remove the trustee. How did the Court manage to do that?
Missouri has a statute that allows a beneficiary to obtain a Court ruling as to whether or not an intended challenge violates a trust’s no-contest clause. (See Section 456.4 – 420). The appellant beneficiary failed to avail himself of this provision. End of case.
But not so fast. The Honorable Paul Wilson wrote a scorching concurring opinion and, as expected it’s brilliant[1]. Judge Wilson was on to something – the entire litigation appeared to be fabricated to illicit an otherwise unavailable advisory opinion from the Courts. If you want to observe arguably misbehaving attorneys eloquently unskinned with quotes ranging from the Missouri Supreme Court in 1896 and US Supreme Court in 1850, click here and enjoy.
[1] I worked with Paul Wilson in the Attorney General’s office for years and he is one of the most talented colleagues I’ve ever had.